On an average day, or at least an average day in the last three months, NextWave Wireless (OTC: WAVE) constitutes nothing more than a ripple of trading at around 8,000 shares. Today saw NextWave, and its massive debt of over half a billion dollars, trade 36 shares shy of 1.5 million on AT&T’s announcement that it would be making a cash offer for NextWave and it’s unused wireless spectrum.
AT&T (NYSE: T) also announced, though didn’t disclose details, that it would be acquiring the limited amount of spectrum that Comcast isn’t selling Verizon (NYSE: VZ). AT&T is also planning to purchase spectrum from Horizon Wi-Com, a small Miami-based company that tried and failed to start up its own wireless broadband network.
Not surprisingly, shares of NextWave Wireless went mental, closing the day up well over 400%. NextWave began the day at $0.25 and closed at $1.29.
AT&T is clearly looking for additional broadband options following its proposed purchase of T-Mobile, which was struck down on anti-trust grounds last year. The size of the deals couldn’t be more glaring in comparison. It was AT&T’s intention to purchase T-Mobile for $39 billion, while today’s three deals combined should not exceed $1 billion, with up to $600 million going to NextWave alone.
NextWave’s radio bands have been problematic for the beleaguered company. They lie close to frequencies that are used for satellite communications, and interference concerns have prevented them from being used in the past.
Clearly, AT&T doesn’t worry about the FCC freeing these bands for the communications giant. “WCS spectrum was first auctioned in 1997, but has not been utilized for mobile Internet usage due to technical rules designed to avoid possible interference to satellite radio users in adjacent spectrum bands,” AT&T’s news release said. “In June, AT&T and Sirius XM filed a joint proposal with the FCC that would protect the adjacent satellite radio spectrum from interference and enable WCS spectrum — for the first time — to be used for mobile Internet service,” the release added. “This proposed solution on WCS spectrum, which is still under review by the FCC, effectively creates much-needed new spectrum capacity.”
The end result of today’s announcement regarding NextWave Wireless is twofold: Firstly, it will finally allow NextWave to die. Something the FCC intended years ago before the company was saved by the Supreme Court. Secondly, it shows that delisted NASDAQ companies with assets are often worth holding on to as they are downgraded to OTC markets.
The race is on between AT&T and Verizon to secure alternate spectrums. As the smart phone and tablet market expand each year, the key is finding smaller companies that can benefit from this upcoming fight between the only big kids left on the block.